From hungary-report-owner Tue Sep 12 00:26:43 1995 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id AAA28228; Tue, 12 Sep 1995 00:26:43 -0700 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id AAA28219; Tue, 12 Sep 1995 00:26:21 -0700 Received: from steve@isys.hu () via =-=-=-=-=-= for hungary-report@hungary.yak.net (28217) Received: from kingzog.isys.hu (KingZog.isys.hu [194.24.160.4]) (fnord) by nando (8.6.5/8.6.5) with ESMTP id AAA28175 for ; Tue, 12 Sep 1995 00:25:24 -0700 Received: from [194.24.160.22] (bubba.isys.hu [194.24.160.22]) by kingzog.isys.hu (8.7.Beta.11/8.7.Beta.11) with SMTP id JAA29656 for ; Tue, 12 Sep 1995 09:24:46 +0200 (MET DST) Date: Tue, 12 Sep 1995 09:24:46 +0200 (MET DST) X-Sender: steve@mail.isys.hu Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" To: hungary-report@hungary.yak.net From: steve@isys.hu (Steven Carlson) Subject: Hungary Report 1.22 Sender: owner-hungary-report@hungary.yak.net Precedence: bulk Reply-To: hungary-report@hungary.yak.net Dear Readers, I'm terribly sorry for more than the one week's delay in this issue. As I explain an a "Reader Update" section at bottom, these are critical times for the continuation of this service. Wish me luck, and please bear with me if we experience further delays in the coming weeks. Rick PS: Due to technical problems, John's feature story will be sent shortly under separate cover. ======================== The Hungary Report Direct from Budapest, every week No. 1.22, September 10, 1995 ======================== The Hungary Report is supported in part by: MTI-Econews, a daily English-language financial news service. For online (fee-based) subscription information, contact the Internet address: . (It's not automated -- write a nice note). ======== CONTENTS BRIEFS Coalition survives most serious crisis Minorities disputes with three neighbors heating up Gates visit brings loads of hype, vague Matav agreement Moscow office of Malev attacked, occupied Jozsef Torgyan's Smallholders top the polls OTP won't buy Magyar Nemzet, again Apple crop half of last year's output 1996 devaluation set for 1.2% monthly Hungary and Slovakia seek out-of-court settlement on dam Pal heads MOL NUMBERS CRUNCHED Government plans 1996 budget deficit Current budget deficit through July Exports bound for developed countries Pupils starting school this year Foreigners with work permits Number of years before standard of living improves FEATURE STORY Hungarian humor By John Nadler PALIAMENT WATCH Horn's retreat: conspiracy or failure? READER UPDATE What's the story with the Hungary Report these days? ====== BRIEFS Copyright (c) 1995, Rick E. Bruner ------------ GENERAL NEWS Coalition survives most serious crisis A dispute between the two governing parties, the Socialists and the Alliance of Free Democrats (SZDSZ), which looked set to destroy the coalition at the end of August, ended peacefully (for now) in the middle of last week. At the center of the dispute was Prime Minister Gyula Horn's insistence on a cabinet reform that would have introduced three new ministerial positions. Those would have included a Minister of Economic Affairs, a minister of "decision-making" responsible for coordinating the inter-ministerial communication within the government, and would have elevated the rank of the state secretary heading the Prime Minister's Office to a ministerial level. The SZDSZ firmly opposed the expansion plans as unnecessary, a position they held since the prime minister first venture the idea two months earlier. Most strongly, the liberal party rejected the appointment of Sandor Nagy, head of the Federation of Hungarian Trade Unions, to the position of Minister of Economic Affairs. With absolute defiance, the junior coalition partner stood its ground and said it would leave the government if Horn insisted on pushing his plans through. Indeed by Friday, September 1st, newspapers were flatly predicting the end of the coalition, and only 40% of the public expected the government would survive, according opinion polls. A rumor swept the press, government and diplomatic circles that a secret report was doing the rounds of foreign embassies in Budapest outlining the grim scenario of government collapse followed by an election victory for demagogic Jozsef Torgyan and his populist Smallholders, currently the most popular party in opinion polls. Various western embassies subsequently denied any knowledge of such a report. Finance Minister Lajos Bokros, architect of the radical economic reforms the government adopted last March, added to the pressure by saying he would probably resign if the Free Democrats left because the Socialists' thin remaining Parliamentary majority of 54% would not be enough to secure adherence to his controversial austerity program. But by that weekend, it was union boss Nagy himself who heralded an end to the dispute by telling Nepszabadsag on Sunday he had decided not to take the ministerial position if it were offered to him because he considered the coalition's stability most important. That was followed last Monday by Prime Minister Horn adopting a conciliatory tone in a speech to Parliament, marking the legislative body's return after summer holidays. "I am firmly determined to end this dispute soon," Horn told the MPs. By Tuesday, he put the matter to rest, emerging from a meeting of inter-party negotiators to tell the press, "The two governing parties, the Socialist Party and the Free Democrats, will keep the coalition alive to ensure the government's and Hungary's stability," according to Nepszabadsag. Whether the parties really achieved accord, or simply glossed over differences to end the crisis, remains to be seen. For the moment all they appeared to have done was agreed to keep negotiating and improve communications, while putting off final decisions of a cabinet reform for another two weeks. Over this weekend, Prime Minister Horn and SZDSZ Party President Ivan Peto reaffirmed their dedication to the coalition's survival in a joint television interview, but the SZDSZ meanwhile also reconfirmed its opposition to any new ministerial posts at a party meeting on Saturday. Minorities disputes with three neighbors heating up Across three borders, in Romania, Serbia and Slovakia, ethnic-Hungarians are under new anti-minority pressures and are raising their voices for Budapest's ear. An estimated 20,000 of Transylvania's 1.7 million ethnic Hungarians demonstrated in Szekelyudvarhely, Romania, on Saturday, September 2, protesting Romania's new Education Law, which restricts the use of Hungarian-language studies. In Slovakia, meanwhile, the Minster of Education allegedly threatened to close schools in the western part of the country where thousands of ethnic Hungarian parents in many villages were withholding their children from the start of school. The Hungarians, who number some 600,000 in Slovakia, are protesting the forced introduction of bilingual classes in schools, even where Hungarians form the overwhelming majority of pupils. Most worrisome, however, are noises coming from the Vojvodina region of Serbia, where representatives of the 350,000 ethnic Hungarians there are warning Budapest of state plans to relocate most of the 150,000 Krajina Serb refugees into the Vojvodina region, upsetting the ethnic balance in the area and possible forcing Magyars from their homes in the process. Officials in Belgrade have not confirmed plans to relocate the refugees, but Budapest has passed on its warning to Slobodan Milosevic's government that the treatment of Hungarian minorities will be the touch-stone of Serb-Hungarian relations in the near future. Prime Minister Horn and Romanian President Ion Iliescu exchanged polite statements last week about hopeful progress on the two countries' long-stalled treaty regarding border integrity and minority rights. Meanwhile, Horn held a strangely secret meeting with Slovak Prime Minister Vladimir Meciar at an undisclosed Slovak location on Tuesday, August 29. The agenda of the meeting has yet to be made public, though the local press had no shortage of speculation about what was discussed, including the usual problems regarding minorities and the six-year-old Danube dam dispute at Gabcikovo, Slovakia. -------------------- BUSINESS & ECONOMICS Gates visit brings loads of hype, vague Matav agreement The aging junior genius billionaire of the computer world, Bill Gates, whipped through Budapest on September 1, doing his darnedest to sell Microsoft's new mega-product, Windows '95 operating system, and signing a loosely worded letter of intent with state the telephone company, Matav. At his only public appearance, Gates arose through a hole in the stage of the Opera House amid a cloud of steam and heavy metal guitar chords, and proceeded to give a 20 minute sales presentation, complete with an old-fashioned slide show, about the many reasons Hungarians need to spend the equivalent of a third of their average monthly gross wages to update their computer operating systems. According to the Microsoft-Matav quasi-agreement, the companies will explore the possibilities of jointly introducing the new Microsoft Network commercial online service to Hungary, as well as preparing Matav to offer Internet and "broadband" services, such as video transmission via telephone lines. No time-frame or investment scale for any such cooperation was announced. Microsoft hasn't yet made public the sales figures of Win95 in its first week on the local market, which is presently available only in English. A Hungarian translation of Win95, as well as the company's most popular software package, Microsoft Office, will be on sale before the end of the year, according to one distributor. ----------- SHORT TAKES THE MOSCOW OFFICES OF MALEV AIRLINES WERE ATTACKED and forcibly occupied for several days by members of another corporation who claimed ownership of the premises. After Moscow police refused to protect the property or safety of the airlines staff, who were receiving death threats, the incident -- which began August 23 -- ended a week later with an apology from the Russian foreign minister, a new lease guaranteed by the city council and police protection. Malev has leased the offices for 27 years from Aeroflot, but the Russian airline was said to be two years behind in making payments to the property's owner. Damages totaled more than $200,000, including $30,000 of staff private property, according to the office's manager. THE SMALLHOLDERS ARE THE MOST POPULAR PARTY. The non-allied opposition party, whose political identity is vaguely defined beyond "populism" for mostly peasant constituents, is led by Jozsef Torgyan, a former lawyer whose incessant outcries and speeches in Parliament, mostly attacking the government for any imaginable reason, pepper each evening news with comic relief. The party is now supported by 16% of the population, ahead of the governing Socialists' 14% and the Free Democrats' 9%, according to the latest monthly poll by Szonda Ipsos. OTP WILL NOT BUY MAGYAR NEMZET, FOR THE SECOND TIME. First the National Savings Bank (OTP) offered to buy the ailing conservative daily paper for HUF 75 million, then pulled out, only to offer HUF 50 million a few weeks later. Last Thursday, however, the bank changed its mind again after a financing from an unnamed German publisher fell through, according to Nepszabadsag. The left-wing government is eager to privatize the paper, which allegedly loses thousands of dollars each day. HUNGARY'S APPLE CROP WAS HARD HIT BY SPRING FROST and will yield approximately half of last year's 650,000 apples. The Apple Product Council has appealed for the abolishment of the 72.4% import duty on apples, or else fruit processors will not be able to meet orders for juice, reports Econews. THE NATIONAL BANK HAS ANNOUNCED THE 1996 DEVALUATION SCHEDULE. The so-called "crawling peg" devaluation rate for the forint has been set at 1.2% per month for 1996, which may be lowered in the second half of the year, economic conditions permitting, the president of the national bank, Gyorgy Suranyi, announced on September 1. Announcing the devaluation rate in advance helps businesses plan according, Suranyi said, as well as prevents currency speculation. The forint is valued in a currency basket of 30:70 US$-ECU since March, Econews reports. HUNGARY AND SLOVAKIA ARE SEEKING AGREEMENT ON THE DANUBE DAM DISPUTE outside of their legal suit pending at the International Court of Justice in the Hague. Last week, senior foreign ministry representatives of the two countries met in Bratislava to discuss a "common sense" solution to their six-year-old environmental, legal and financial disputes about the dam at Gabcikovo, Slovakia. The press speculates this subject was also discussed during Prime Ministers Horn and Meciar's secretive meeting last week. Environmentalists over this weekend denounced any attempt to compromise on the dam dispute. ---------------- NUMBERS CRUNCHED * Government projection for next year's budget deficit, as percentage of the gross domestic product (Government Cabinet Meeting, September 1): 3.9% * Budget deficit as of the end of July (Central Statistics Office): HUF 195 billion (US$ 1.5b) * Percentage of Hungary's export that go to developed countries: 71.5 * Number of pupils who started school on September 4 (Ministry of Culture): 1,476,000. * Number of foreign citizens with legal work permits in Hungary (National Labor Center): 20,521 * Of those, number of US citizens: 691 * Number of years before Hungarians will experience an improved standard of living, as an average response in a recent opinion poll (Szonda Ipsos, Nepszabadsag): 11 ------------- EXCHANGE RATE September 8, 1995 (National Bank of Hungary) US dollar - 133.05 (buying), 135.47 (selling) Deutschemark - 89.64 (buying), 91.42 (selling) -------------- WACKY AS USUAL Pal heads MOL Laszlo Pal, you may recall, was fired two months ago because of his stubborn stance on privatization in the energy sector that ran counter to Finance Minister Lajos Bokros' economic reform plans. Prime Minister Horn stood by Bokros and axed Pal. So where does Pal now turn up, out of harm's way? As the newly appointed general manager of the Hungarian Oil Company (MOL Rt.). This should still get interesting. ---------------- PARLIAMENT WATCH Horn's retreat: conspiracy or failure? By Tibor Vidos Copyright (c) 1995 Political betting is unfortunately not common practice in Hungary. Unfortunately, because great wealth could have changed hands over the recent days. On 1 September the odds for the survival of the coalition between the Hungarian Socialist Party and the Alliance of Free Democrats would have been something like 1:9. In other words, the coalition was dead. On 5 September the odds stood at 8:2, i.e. there was good hope the coalition will survive the current crisis. For the time being, at least. What happened over the weekend of September 2-3? Did an angel descend on Prime Minister Gyula Horn and say: "Gyula, you are wrong, you should not insist on the creation of a new economic ministry and the appointment of Sandor Nagy (a hard-line socialist MP and head of the largest trade union federation) as a new Minister of Economy! You should stop publicly announcing major policy plans and decisions without consulting your coalition partner. From now on you have to become a consensus builder and not a coalition bomb maker!" No, it is unlikely that this has happened. Although the current coalition conflict carries a number of irrational elements, there must be more sensible explanations for this sudden change in the Prime Minister's behavior. What could these be? Hypothesis 1: Horn, the skilled conspirator The Prime Minister never wanted to appoint Mr. Nagy as a minister and only played a dirty trick on him two months before the Socialist Convention in November. By publicly announcing that Mr. Nagy (one of the likely competitors to Mr. Horn for the prime minister's office in the future) is to become the minister of economy, the trade union boss has been discredited as a closet government official. At the same time, the left wing of the party, most effectively represented by Mr. Nagy himself, received the message: "I really would like to appoint your man into office, but the liberals would simply not let me do it." The play was scheduled to end before Parliament went into session on September 4. Hypothesis 2: Horn, the unsuccessful Sensing the growing discomfort with his style of government inside the Socialist Party, the prime minister decided to ally himself with the left wing of his party to survive the Party Convention due in November. He believed that the Free Democrats would swallow the bitter pill in order to stay in power. Realizing that this was not the case and that significant groups inside the Socialist Party insisted on the continued cooperation with the liberals, the Prime Minster retreated. In either case the consequences are not too cheerful. At least not while the party convention is likely to be dominated by the consequences and reflections of the internal power struggles of the socialist party. Not good news at all. * * * Tibor Vidos is a lobbyist and political consultant in charge of the Budapest office of GJW Government Relations. or A version of this article appeared in the Budapest Business Journal. ============= READER UPDATE What's up with the Hungary Report? Greetings Hungary Report readers. Again, accept my apologies for the lax service over the last month. The behind-the-scenes story is that my wife and I are leaving Hungary, after I've been living her five years, and we're moving to San Francisco, in five weeks. The Report had been something like a hobby of mine, particularly as I had till now never found free time to seek sponsorship for its perpetuation. It's still my determination in the remaining weeks before I go to find a corporate sponsor. A new local Internet service provider, iSYS, has volunteered to help me design a better Web site for archiving and automatic subscriptions, after the completion of which I will approach a few potential sponsors. A couple of friends have already agreed to carry on writing the Report along the same format in exchange for modest compensation. With a million and one things to do before my departure, I can't promise to improve my deadline punctuality in the next few weeks. I may devote the energy instead to ensuring the Report's survival. Wish me luck. Furthermore, if any Hungary Report readers were interested in becoming sponsors yourselves, or if you know another company or organization (whatever) that might be, please be in touch urgently. Cheers, Rick =========== FINAL BLURB The Hungary Report is free to readers. To subscribe, send an email message to the following Internet address: hungary-report-request@hungary.yak.net containing (in the body of the message, not in the headers) the single word subscribe Conversely, to stop receiving Hungary Report, simply send to the same address (in the body of the message) the single word unsubscribe Please note: all mailing lists suffer from frequent "error" addresses. If we have problems with sending to your address more than one week in a row, we will remove you from the list. If you haven't received the report for more than one week, feel free to enquire directly to Rick Bruner (but please wait for at least a week, as we're also just famously late in getting the thing out sometimes :) * * * Back issues of The Hungary Report are available on the World-Wide Web http://www.yak.net/hungary-report/ and via FTP host: ftp.yak.net directory: /pub/hungary-report/ login name: "ftp" password: your email address * * * The entire contents of The Hungary Report is copyrighted by the authors. Permission is granted for not-for-profit, electronic redistribution and storage of the material. If readers redistribute any part of The Hungary Report by itself, PLEASE RESPECT AUTHORS' BY-LINES and copyright notices. Reprinting and resale of the material is strictly prohibited without explicit prior consent by the authors. Please contact the authors directy by email to enquire about resale rights. * * * For information on becoming a corporate sponsor of The Hungary Report, contact Rick E. Bruner by email. Feedback is welcome. Rick E. Bruner John Nadler Tibor Vidos or * * * For its briefs, The Hungary Report regularly consults the news sources listed below -- for information about subsriptions, contact them by email: The Budapest Business Journal <100263.213@compuserve.com> (and tell them what dwads they are for making us pay for issues at the newsstand); Budapest Sun <100275.456@compuserve.com>; Budapest Week and Hungary Around the Clock (same email address) <100324.141@compuserve.com>, and Central Europe Today (free online) . ================ END TRANSMISSION --- Steven Carlson iSYS Hungary info@isys.hu steve@isys.hu http://www.isys.hu